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SoftBank Group Corp. fell as much as 7.1% on Wednesday, taking losses to around 14% this week after the Japanese conglomerate made substantial bets on equity. derivatives in technology stocks before a general sell-off of the sector.
The Japanese company hit a low of 5,432 yen in Tokyo morning trading. It has thrown in approximately $ 17 billion of market value since Monday, as SoftBank’s big bets on high-flying tech stocks from Amazon.com Inc. for Alphabet Inc. spooked investors.
Investors are grappling with the recent market turmoil, assessing whether the stock pullback is a sign of market health or the beginning of a bigger slide that needs to go further. Tesla Inc., which had defied gravity and market watchers for much of the year, was the worst performance on the Nasdaq 100 index on Tuesday, which fell 4.8% amid a sell-off of shares. SoftBank has It said it had $ 122.9 million from the automaker as of June 30.
“Even more than the actual SoftBank exposure, it is the act itself that is puzzling,” said Justin Tang, head of Asian research at United First Partners in Singapore. “Investors are very cautious about the ‘change of style.’ The question is’ what are we investing in when we buy SoftBank? Is SoftBank a better investor than us? ‘”
Read more: SoftBank’s Big Options Bet Tests Investors’ Faith in Masayoshi Son
SoftBank had stakes in 25 of the world’s largest technology companies worth $ 3.9 billion as of June 30, according to a document filed with the United States Securities and Exchange Commission dated August 17. The portfolio included $ 1.04 billion of Amazon stock, its largest investment, a $ 475 million stake in Alphabet, $ 248.6 million from Adobe Inc. and $ 189 million from Netflix Inc.
The Tokyo-based company posted a 65.4 billion yen ($ 617 million) profit from the sale of some of the shares, it said in a presentation to investors on Aug. 12. SoftBank said it invested more than 1 trillion yen in listed sharesAnd it sold 564.9 billion yen, all in the same quarter. The report does not mention derivatives linked to those investments.
SoftBank revealed in August that it was establishing an asset management arm to trade government securities and said it could use derivatives. What has alarmed shareholders is that Son appears to be using options to amplify his exposure amid growing concerns about inflated valuations by individual mercurial investors.
The Financial Times reported that SoftBank spent about $ 4 billion on options focused on technology stocks with an overall exposure of about $ 30 billion. The company has paper earnings of about $ 4 billion in earnings from those holdings, the newspaper said, citing people familiar with the matter.
The speculative fever that fueled bullish bets in options markets and caused stocks of bankrupt companies to surge broke in September, wiping out trillions of dollars in market value.
Read more: SoftBank’s Chief Compliance Officer has left the company
